Dynamic Capabilities for Hire: How Former Host-country Entrepreneurs as MNC Subsidiary Managers Affect Performance

Andreas P. Distel*, Wolfgang Sofka, Pedro de Faria, Miguel Torres Preto, António Sérgio Ribeiro

*Corresponding author for this work

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Abstract

MNC subsidiaries benefit from managers with entrepreneurial skills for finding superior combinations of MNC and host-country resources. However, such management skills are scarce. We reason that subsidiaries can improve their performance by hiring host-country entrepreneurs as managers since they develop similar skills in start-ups. Our theoretical model integrates mechanisms from entrepreneurial experience into theory on the microfoundations of dynamic capabilities. We test and support our prediction using longitudinal employer–employee data for 5587 foreign MNC subsidiaries in Portugal. Further, we show that performance effects are weaker when a subsidiary’s management is internationally diverse and stronger in dynamic host-country environments.
Original languageEnglish
JournalJournal of International Business Studies
Volume53
Issue number4
Pages (from-to)657-688
Number of pages32
ISSN0047-2506
DOIs
Publication statusPublished - Jun 2022

Bibliographical note

Published online: 20. Nov. 2019.

Keywords

  • Dynamic capabilities
  • Entrepreneurial experience
  • Entrepreneurship
  • Entropy balancing
  • Microfoundations
  • MNC subsidiaries
  • Subsidiary managers

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